Question Details

Which of the following is a reason why the specific identification method 



1.	Tanner Corporation's inventory cost on its statement of financial position was lower using first-in, first-out than it would have been using average cost. Assuming no beginning inventory, in what direction did the cost of purchases move during the period?
a.	Up
b.	Down
c.	Steady
d.	Cannot be determined

	2.	In a period of declining prices, the inventory method which tends to give the highest reported cost of goods sold is
a.	specific identification.
b.	average cost.
c.	FIFO.
d.	none of these.

	3.	The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the
a.	weighted-average method.
b.	moving average method.
c.	FIFO method.
d.	None of these.

	4.	Which of the following is a reason why the specific identification method may be considered ideal for assigning costs to inventory and cost of goods sold?
a.	The potential for manipulation of net income is reduced.
b.	There is no arbitrary allocation of costs.
c.	The cost flow matches the physical flow.
d.	Able to use on all types of inventory.

	5.	In a period of falling prices which inventory method generally provides the lowest reported inventory?
a.	Average cost.
b.	FIFO.
c.	Moving average.
d.	Specific identification.




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